Silver has been showing some positive technical signs recently, as the shiny metal stops making bearish lower lows in the short-term and holds above the technically important $22.50 area.
Rising government bond yields and the appreciating US dollar index on the foreign exchange market are bearish elements weighing on safe-haven metals. A bullish factor is crude oil pushing to a seven-year high above the $80.00 mark.
Silver enjoyed a strong bid-tine last Friday after the Non-farm payrolls job report significantly disappointed to the downside, with one of the worst headline numbers of the year so far.
The number one factor for silver is QE. Aside from war, where silver is needed in copious amount for ammunition, QE is the biggest factor for further price appreciation, hence why US data is so important.
On the technical front the big level to watch is $23.20. This is the neckline of a large, inverted head and shoulders pattern and a potential $1.00 rally breakout point if silver bulls take control this week.
Retail traders are once again massively stacked to the long side and believe that the shiny metal will continue to rise. This retail sentiment skew has been a thorn in the side of the metal all year.
The ActivTrades market sentiment tool shows that some 83 percent of traders are bullish towards silver right now. This huge sentiment skew will need to drop in order for a big recovery to take hold.
Silver short-term Technical Analysis
The short-term technicals for silver show that a large, inverted head and shoulders pattern will form if bulls are able to stage a rally back towards the $23.20 area.
According to the overall size of the typically bullish pattern silver price could be due a further $1.00 rally in the short-term. Watch out for more heavy losses if we see the price slip below the $22.50 level.
Silver Medium-term Technical Analysis
The daily time frame that a break under a large flag pattern continues to unfold. These flag patterns often signify large price ranges before an eventual range breakout.
According to technical analysis silver is attempting to mov back inside the flag pattern after a potential false breakout to the downside. Gains above the $24.00 level could provide the next big bull run in silver and confirmation of a false breakout.